It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM).<\/p>\n
By Alokananda Chakraborty<\/b><\/p>\n\n
India may boast of the presence of several marquee international coffee chains, but none of them, with the possible exception of Starbucks, have been able to make much of an impact. The reasons are obvious; for one, India is largely a tea-drinking market, with coffee penetration still at just about 11%. Coffee remains largely an in-home consumption drink. Then there are the usual challenges of getting prime real estate at a reasonable cost and consumers\u2019 capacity to pay. The pandemic, which disrupted food supply chains and the overall demand, delivered a body blow, leading to shutdown of around 8% of the outlets during 2021.<\/p><\/div><\/div>\n\n
It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM). The first store will open by the end of this financial year. While RBL is tight-lipped about the pricing or positioning strategy, experts say PAM\u2019s biggest advantage is its association with Reliance.<\/p>\n\n
\u201cPAM is a late entrant and would have been at a huge disadvantage if it went alone,\u201d says Anthony Dsouza, executive director & country service line leader, innovation, Ipsos India.<\/p>\n\n
So what does Reliance brings to the table? \u201cSignificant investment capability, real estate strength and know-how of retail. These could lead to a much higher scalability and access to the right locations,\u201d says Angshuman Bhattacharya, national leader, consumer product and retail sector, EY India. \u201cHowever, running a caf\u00e9 chain also involves building out the right supply chains across the country, which the brand would need to build,\u201d he adds.<\/p>\n\n
Bhattacharya is bang on. The success of an F&B franchise business depends on getting real estate at the right price. Reliance can offer a tremendous advantage here to PAM. Not only does it run a very large retail business, it also owns malls.<\/p>\n\n
Experts say a lot would also depend on the right pricing. Pramod Damodaran, who had relaunched Costa Coffee India in his earlier stint as COO for that firm, and is now CEO of Wagh Bakri Tea Lounge, says, \u201cThere\u2019s a big space between the 240 and170 for a cup of cappuccino, that is, just below the Starbucks\/Costa Coffees of the world.\u201d<\/p>\n\n
PAM will probably occupy that window \u2013 it is unlikely to be a premium offering for two reasons. One, PAM is primarily a sandwich chain in the UK and it\u2019s not clear how much premium it can command for a pre-made sandwich. Two, if PAM were to take advantage of the retail footprint of Reliance and were to follow a shop-in-shop format, say, in a Reliance Trends store, it can\u2019t afford to be premium. The positioning would be a consequence of that captive audience.<\/p>\n\n
In other words, the store location will, to a large extent, determine both the pricing and positioning of PAM. Agrees Devangshu Dutta, chief executive of Third Eyesight, a specialist management consulting firm: \u201cAt the end of the day, PAM is more a quick service outlet than a cafe. (Pret A Manger means \u201cready to eat\u201d in French). And the consistency of its offering comes from what is called the pre-prep.\u201d<\/p>\n\n
All PAM outlets in the UK follow the concept of \u201cfreshness of ingredients\u201d and \u201cquickness of service\u201d. The hero product \u2013 the sandwich in this case \u2013 is still a convenience food, a grab-and-go item. It is prepared by a central commissary or multiple commissaries and is at the most heated or packaged at the counter. \u201cSo it is not a restaurant and it can\u2019t charge a restaurant price,\u201d says Dutta.<\/p>\n\n
In a sense, Domino\u2019s has perfected this model with a lot of pre-prep done at the commissary end but the actual pizza is prepared \u201cat location\u201d or in the store. \u201cIn this case (PAM), you are not doing that volume of work at the consumer-facing counter,\u201d Dutta adds. And if that is the model RBL plans to replicate in the country, the positioning, by default, is mass.<\/p>\n\n
\u201cThe PAM-Reliance combination is likely to be a mass market offer, with value pricing and highly localised strategy,\u201d Dsouza of Ipsos says.<\/p>\n\n
But mass or premium positioning, PAM\u2019s entry will no doubt roil the waters. \u201cIncumbents have to up the food game if they want to take on the might of Reliance,\u201d says an executive with a rival brand. Beverages form a dominant part of the caf\u00e9 industry sales. Besides food and beverages, merchandising, which is employed largely for branding, is rapidly becoming a source of additional revenue. About 60-65% of caf\u00e9 sales come from beverages, followed by food which forms about 20-25% and about 10% from merchandise.<\/p>\n\n
For one, Tata Starbucks, which witnessed a 76% growth and logged `636 crore revenue in FY22, has been working at its food menu and delivery for some time. In a recent interview to FE BrandWagon, Sushant Dash, CEO, Tata Starbucks, had said that the brand had to \u201cre-prioritise\u201d because of the pandemic, with innovation becoming more important to keep the brand relevant. Starbucks innovated with the menu to keep the interest level up among customers and introduced new food items and gave the existing food items an Indian twist,\u201d he had said.<\/p>\n\n
Earlier this month, Starbucks added masala chai, filter coffee and an array of bite-sized snacks and sandwiches to its menu card. Its new milkshakes will be priced starting at 275, while masala chai and filter coffee will start from190. It also introduced the \u2018Picco\u2019 \u2013 meaning \u2018small\u2019 in Italian \u2013 starting at `185.<\/p>\n\n
Will that be enough? Given PAM\u2019s strong presence in the food space, there is no denying that existing caf\u00e9 chains in India have to tweak their food menu considerably. In other words, they will have to get out of their comfort zones.<\/p>\n\n
Source: financialexpress<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Written ByAlakananda Chakraborty Brand\u2019s positioning may be just below Starbucks It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM). By Alokananda Chakraborty India may boast of the presence of several marquee international coffee chains, but none of them, with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[27,212,215,631,60,3,43],"tags":[99,102,226,214,291,216,217,59,190,191,69,164,147,583,471,660,659],"class_list":["post-4339","post","type-post","status-publish","format-standard","hentry","category-branding","category-consumer","category-food-grocery","category-food-service-restaurants","category-india","category-press-quotes","category-retail","tag-brand","tag-consumer-markets","tag-fast-food","tag-food","tag-food-beverage","tag-food-grocery","tag-food-service","tag-india","tag-india-entry-strategy","tag-indian-market","tag-indian-retail-sector","tag-international-brand","tag-international-brands","tag-preferred-market-entry-route","tag-reliance","tag-reliance-industries","tag-reliance-retail"],"yoast_head":"\n
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